Pulse Blogger How Nigerian’s went from yay to nay over MMM scheme

In the turn of the recent event over MMM announcement of "account freeze", many Nigerians have been thrown into a frenzy, as panic-stricken Nigerians who were involved in the scheme took to social media platforms to vent their fears and anger.

MMM is a mutual financial aid scheme that was introduced in Nigeria in November 2015.

The scheme had, by the end of November 2016, about three million people signed up to MMM's official website, and is said to have been amongst the top 5 most visited website.

A brief history of MMM

MMM was established in 1989 by Sergei Mavrodi, his brother Vyacheslav Mavrodi, and Olga Melnikova. The name of the company was coined from the 3 ‘M' letters of the 3 founders surnames.

MMM created it’s first Ponzi scheme in 1994 after several collapses of the company in the previous years. The company started operation by attracting money from private investors promising annual returns of up to 1000%.

MMM grew rapidly, as at the year 1994, the company reported dividends of 1000% and started an aggressive TV ad campaign. Since the shares were not quoted on any stock exchange and the company itself determined the share price, a steady price growth of thousands of percent annually was maintained. This led the public to believe that its shares were a safe and profitable investment.

By July 22, 1994, the MMM office was closed down by the police over tax evasion. Though the company tried to continue the scheme, it finally ceased operations. This led to the crash of the business as many investors couldn’t get their money out.

In later years, the company moved to South Africa, this time claiming a 30% monthly return through a social financial network. The group was identified as a possible pyramid scheme by the national consumer commission and accounts of participants were later "frozen."

MMM in Nigeria

This brings us back to the current case of Nigerian investors who participated in this scheme. On Monday evening, just hours before it suspended further payments to participants, the Twitter page of MMM Nigeria tweeted, "MMM has always advised that you use your #sparemoney. Use your #SpareMoney and #SpareMoney only. Don’t be unnecessarily greedy."

By Tuesday morning, the company put up a disclaimer on its website informing Nigerian participants that there would be a temporary freeze on payments to existing participants till January 2017. It blamed the action on heavy workload experienced by the servers.

MMM is a Ponzi scheme

A Ponzi scheme is a fraudulent investment operation, in which the operators pay a return to investors from new capital given to the operators by new investors.

The operators attract investors by offering high rate returns for the investment made, in the form of a short-term return that is usually very high than normal.

In this case, MMM Nigeria gave 30% return and $20 bonus to investors, and also a 10% return to people who registered other investors to the scheme.

It is devastating that some gullible Nigerians who were blinded by greed and were in a hurry to get easy money, ignored the forewarning from the Federal Government, and even MMM, to put in spare money only.

Some people are crying over their money and I can only feel sorry for them because MMM is a Ponzi scheme that was destined to crash sooner or later. So there are no surprises.

I know some MMM extremists would jump in to defend the "Almighty MMM" but before you display your stupidity, take a moment to ask yourself these questions.

I know this might seem like medicine after death, but I want Nigerians to take a lesson from this and stop being greedy and gullible to such fraudulent schemes masquerading as financial aid programmes. The way to financial success is not by investing in Ponzi schemes.

Ella Chikezie is a Nigerian writer, filmmaker and creative entrepreneur. She’s a final year biochemistry student at the University of Port Harcourt, she resides in Lagos with her family and hopes to make a difference in the world through writing.

For more thought-provoking articles from her, you can visit her personal blog at www.ellawritesng.wordpress.com or connect with her on Instagram and Twitter